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office leasing: Office leasing during Oct-Dec 23 was highest ever quarterly leasing : CBRE

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Office space leasing has recorded a 4-year high with a 7% Y-o-Y increase across top 9 cities, with an absorption of 61.6 million square feet in 2023, according to CBRE.

Oct-Dec 23 period sees highest-ever quarterly office leasing at 19 million sq ft.

Development completions increased by about 13% Y-o-Y to reach 56.7 million sq. ft., an all-time high during 2023. Developers continued to exhibit their efforts towards sustainability, with nearly half of the newly completed developments during 2023 being green-certified (LEED or IGBC).

“In 2023, the global economy, while grappling with monetary tightening and geopolitical challenges, fared better than expected. Most major economies managed to avoid a recession, while the Indian economy continued demonstrating resilience in the year gone by. The Indian economy is anticipated to exhibit similar resilience in 2024 as well, led by strong domestic growth and sustained capital expenditure,” said Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE.

As per the report, Bangalore, Hyderabad, and Chennai accounted for nearly 57% of the yearly leasing activity. On an annual basis, BFSI firms drove leasing with a share of (22%), followed by technology companies (21%), engineering & manufacturing companies (15%), and flexible space operators (14%).

American multinationals led the leasing activity in the BFSI sector, accounting for about 48% of the total leasing as they leased office space for their global capability centres (GCCs).“The office sector also performed better than expected, with many occupiers finalising deals in the latter half of the year. Driven by steady momentum in enquiries, this demand is likely to remain largely stable during H1 2024. However, we expect demand to pick up momentum during H2 2024, led by clearer visibility of the global macroeconomic situation and an uptick in the global information technology (IT) services sector,” Magazine said. Office space take-up was dominated by small- (less than 10,000 sq. ft.) to medium-sized (10,000 – 50,000 sq. ft.) transactions in 2023 with a share of 84%. The share of large-sized deals (greater than 100,000 sq. ft.) in 2023 marginally increased to 7% from 6% in 2022. Bangalore and Hyderabad dominated large-sized deal closures in 2023, followed by Chennai and Delhi-NCR, while a few such deals were also reported in Pune and Mumbai.

“Global firms would also continue to finalise their leasing decisions as they aim to set up or expand their footprint in the country. The office sector is likely to witness expansion by domestic firms from sectors such as banking, financial services, and insurance (BFSI) and engineering and manufacturing, while also seeing growth from other sectors such as life sciences and flexible space operators,” said Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India.

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